• by Teresa Buyikian , August 30, 2023

Despite a 5% increase in year-over-year sales, restaurants continue to be beleaguered with high food and labor costs, according to new insights released this week from restaurant enterprise management software company Restaurant365.

The findings cover economic, sales, workforce, operational and consumer preference trends, and are based on customer data collected from Q2 of 2022 to Q2 of 2023, as well as a poll conducted in July 2023 representing 14,000 locations within the fine and casual dining, fast casual and QSR segments.

The July 2023 customer poll shows 74% of respondents have experienced an increase in food costs, with an average increase of 13%. Fifty-three percent of operators reported they have reduced their cost of goods sold through improved inventory tracking.

Labor costs also continue to rise; 83% of restaurants polled experienced higher labor expenses, with an average increase of 8%. Fifty percent of respondents said recruiting and retaining staff is their biggest challenge in 2023, leading to 53% that have turned to offering higher wages to compete for employees.

The 5% increase in YOY sales from Q2 2022 to Q2 2023 also notes shifts in consumer dining-out preferences. Customer data shows that within this same timeframe, on-premises dining has increased by 9.2%, takeout sales have dropped by 6.1% and delivery sales have remained relatively flat with a 0.1% decrease.

"While nobody can predict sudden shifts in consumer preferences, operators can prepare themselves and be ready to quickly pivot to accommodate these changes," said Tony Smith, CEO and co-founder of Irvine, Calif.-based Restaurant365. “Using the data … to determine which streams of revenue are of greatest value, create more profitable menus and control inventory and labor costs are a few of the ways operators can continue to drive sales and stay profitable in a changing market."

Restaurant365 announced in May that it received a $135 million funding round co-led by global investment firms KKR and L Catterton, with participation from current investors including ICONIQ Growth and Bessemer Venture Partners.